Rupert Murdoch considering merging Fox and News Corp

(Reuters) – Rupert Murdoch has begun a process that could unite his media empire, News Corp. (NWSA.O) and Fox Inc (FOXA.O) It was revealed on Friday, saying it would consider a merger at his behest, after nearly a decade of splitting between the companies.

They both said they had set up special committees to review proposals for a potential lineup.

If a deal goes through, the merger would allow Murdoch more control over his media assets and help companies cut costs. Media companies have been struggling with decades of low growth in ad sales and user attention on social media and content sites.

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After years of expanding globally, Murdoch split his empire in 2013, putting the printing business into a new public entity, News Corp, and television and entertainment under 21st Century Fox.

Murdoch said at the time that his massive media holdings had become “increasingly complex,” and that the new structure would streamline operations. The split also protected Fox’s entertainment assets from any potential financial fallout from a phone hacking scandal involving News of the World, which is now no longer based in the United Kingdom.

The thinking at the time was that segregation of companies would eventually generate shareholder value, according to a person familiar with the decision-making process. This vision came true when Fox sold the bulk of its film and television assets to The Walt Disney Company (DIS.N) $71 billion in 2019.

The sale left Fox focusing on live events like news and sports, rather than “disrupted” written entertainment content on streaming platforms, Wall Street analysts noted at the time.

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However, the main streaming services began to break through the protective trench. Apple company (AAPL.O) and Amazon.com Inc (AMZN.O)two tech giants with deep financial resources, have begun bidding for the sport, securing broadcast rights to major league baseball, soccer and soccer.

Fox recently renewed a long-term deal with the National Football League to continue broadcasting Sunday noon games, but ditched Thursday Football on Amazon.

The person familiar with the proposal said a reunification of Fox and News Corp would give the combined companies greater scope to compete, and complement their assets. The combined companies will generate revenues of about $24 billion.

Murdoch, 91, currently owns semi-controlling stakes in both companies. His son Lachlan Murdoch is the Chairman and CEO of Fox Corp. Firms adopting such arrangements make subsequent mergers subject to approval by a majority of shareholders not affiliated with the controlling shareholder, although it is not clear whether this is the case in this case.

As of the market close on Friday, News Corp’s market capitalization was $9.31 billion, and Fox Corp’s was $16.84 billion, according to Refinitiv. News Corp shares rose 5 percent and Fox shares rose nearly 1 percent in after-market trading.

This development was first reported by the Wall Street Journal earlier today.

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Additional reporting by Yuvraj Malik in Bengaluru; Editing by Krishna Chandra Elori, Grant McCall and Shri Navaratnam

Our criteria: Thomson Reuters Trust Principles.

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